Discord is the communication platform of choice for the gaming community, and its success has many investors asking when and how they might be able to buy Discord stock.
Discord is currently a privately held company, which means that shares are not trading on any public exchange. It may still be possible to buy pre-IPO shares in Discord, Let’s look at why you might want to invest in Discord and at some options for investing in Discord stock.
Update: in June 2022 Fidelity, which invests in Discord and other private companies through its Contrafund, slashed its internal valuation of Discord shares from $550.62 to $373.65, a 32% cut. This is not reflected in the Company’s quoted valuation, as is a private, internal valuation from a shareholder.
What is Discord?
| Discord Fast Facts | |
|---|---|
| Industry | Communications Software |
| Key Competitors | Slack, Telegram, Skype, Element, Zoom |
| Key People | Jason Citron (Co-Founder and CEO), Stanislav Vishnevskiy (Co-Founder and CTO) |
| Founded in | 2015 |
| HQ | San Francisco, CA |
| Website | www.discord.com |
| Current Valuation | $15 Billion |
| IPO Status | Private |
Discord is a communication app that enables chat, voice communication, file sharing, and other features. Many apps provide similar capabilities, but Discord has set itself apart with several notable features.
- It works on any platform. You can use Discord on Windows, iOS, Android, Xbox, Playstation, and others.
- It enables groups and communities. Discord allows private, and public groups called servers, subdivided into channels. Many popular games have their own dedicated servers. Groups of friends can form private servers.
- Screen sharing and live communications while gaming. You can easily use Discord alongside a game or other app.
- High-quality sound. Discord provides better sound quality than most communication apps.
- Compatibility with other apps. You can sync Discord with Twitch, Mixer, YouTube, Spotify, Patreon, and other popular applications and integrate them into your communication networks.
All of these features were originally developed to serve the gaming community. Groups of gamers simultaneously play popular games on different platforms, opening up demand for flexible cross-platform communications.
Discord is rapidly expanding into non-gaming markets. Teens that grew accustomed to Discord while gaming are using it for other purposes as well. Many analysts expect that the Discord generation will stay with the app and find new uses for it.
Many professional groups are discovering that Discord provides a useful alternative to Slack, Zoom, and other communication apps.
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When Will Discord Hold its IPO?
Discord has not yet filed IPO paperwork with the SEC. An IPO was expected in early 2022, but it didn’t happen. The Company’s last funding round established a $15 billion valuation, and the IPO is likely to generate significant attention.
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Financing and Growth
Discord has received financing from multiple venture capital firms, including Greylock, IVP, Benchmark, Tencent, Spark Capital, Greenoaks Capital, and Sony Interactive Entertainment. That indicates a high level of institutional interest and belief in the Company.
Institutional financing also raises the probability that Discord will seek an acquisition or IPO. Those institutional investors will be looking for a profitable exit point.
Discord Cumulative Funding, 2012-2021. Source: Owler
Discord has shown continuous growth in users, accelerated by a surge in activity from home-bound gamers during the COVID-19 pandemic. 850 million messages and four billion minutes of conversation are exchanged every day on Discord.
Discord Monthly Users, 2017-2021. Sources: Business Insider, Techspot
Discord revenues, driven primarily by subscribers to Discord’s premium Nitro service, have increased at a similar rate.
Discord Estimated Revenue, 2017-2021. Sources: Forbes, WSJ
Discord is currently valued at $15 billion. The Company is rapidly expanding both its core gaming market and its non-gaming market and increasingly gaining users in the business communication niche. That combination of growth drivers has increasing numbers of investors asking how they can invest in Discord shares.
How Can I Buy Discord Stock?
Discord is still a privately held company. That means it’s not traded on any public exchange. You can’t simply place an order through your broker.
Discord has been targeted for acquisition several times. In early 2021 Microsoft was reportedly considering buying the company for a reported $10 billion.
Shortly after that story broke, the Wall Street Journal and Bloomberg reported that Discord had walked away from the deal and was expected to launch an IPO instead. That means Discord shares may be traded on the open market soon.
Invest Through a Pre-IPO Secondary Market
If you can invest in Discord shares ahead of the expected IPO, you could be set for a serious gain when the IPO hits. Here are three pre-IPO markets where you may be able to buy Discord Stock ahead of the IPO.
- Forge Global is the world’s largest single pre-IPO marketplace. There’s a $100,000 minimum investment and some shares may have higher minimums and may be limited to qualified buyers.
- EquityZen is an online marketplace that acquires pre-IPO shares from employees, early investors, and other insiders and makes them available to qualified investors. The minimum investment is $10,000 and may be higher for some shares.
- SecFi is a pre-IPO marketplace that specializes in linking employees that want to liquidate their stock options with outside investors.
- Nasdaq Private Market provides access to private company shares for investors who meet SEC accredited investor criteria.
- EquityBee is a private marketplace that allows investors to fund an employee’s stock options in exchange for a share in the proceeds from their eventual sale.
There is no assurance that Discord shares will be available on any of these marketplaces at any given time. You will have to open an account and log in to get specific information on available shares.
📚 It’s a good idea to read up on pre-IPO investing and review this guide to how to buy pre-IPO stock before you start!
Invest in the IPO
Pre-IPO investing is not easy, and shares may not be available. Another option is to invest in the IPO. You won’t get the same price that you’d get in the [re-IPO market, but your risks will be lower. At least you’ll know that the Company will go public and you will be able to dispose of your shares.
Retail investors can participate in IPOs through several major brokers. You will have to meet requirements and you may need to supply information on your finances to meet qualification requirements.
- TD Ameritrade allows account holders to particiate in IPOs where it is part of the selling group. You will need a minimum account balance of $250,000, unless you have made at least 30 trades in the last calendar year.
- Fidelity customers who are in the Private or Premium groups may participate in IPOs. Others may be able to join if they meet a minimum household asset requirement.
- Charles Schwab allows IPO participation for account holders with an account balance of $100,000 or al least 36 trades in their account history.
- E*Trade has no account balance or trading history restrictions on IPO participation. The underwriter of the IPO will supply a qualification questionnaire.
Companies holding IPOs are making an effort o make more shares available to retail investors. The recent Rivian IPO saw the Company offer shares to retail investors through SoFi. Follow the news on the upcoming IPO for announcements of IPO share allocations for private investors and the brokers that will handle them.
In any case, you will have to request IPO shares from your broker after qualification. There is no assurance that the full amount of your request – or any shares at all – will be allocated to you by your broker.
Invest After the IPO
The most conservative way to buy Discord stock would be to wait for the IPO and buy the shares on the public post-IPO market. You can do this through any brokerage account.
You don’t need to invest in the IPO or before the IPO to earn profit. Remember that Tesla shares priced at $17 in their IPO and closed the first trading day at $23. At this writing, they cost almost $200. That may not happen again, but even a post-IPO purchase can be very profitable if the company does well!
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Are There Any Concerns About Discord?
Any pre-IPO investment comes with risks. If the IPO comes off in a receptive market, you can earn significant gains. If Discord delays or cancels the IPO, you may not be able to sell your shares.
As with all investments, there are also some potential concerns about Discord.
- Discord Isn’t profitable. This is common with development-stage tech companies, but you’ll want to keep a close eye on the operating losses.
- Discord has limited revenue sources. Right now, almost all revenue comes from Discord’s premium service. Many users use the free service. There’s potential for advertising and a valuable user database, but using these some could antagonize users accustomed to the current experience.
- There’s competition. Discord occupies a competitive niche, facing apps like Facebook, Slack, Skype, Clubhouse, Twitter, TeamSpeak, and many others.
- Potential political interference. White supremacist and neo-Nazi groups have used Discord to plan activities. The Company is trying to control its users, but the potential for abuse still exists and could encourage more aggressive regulation.
As with any investment, you’ll have to do careful research to determine whether investing in Discord stock is the best use of your money. Consider discussing your plans with a qualified financial advisor!
Conclusion
Discord is a widely recognized company with backing from high-profile venture capital firms. It has turned down acquisition attempts from major players and is expected to hold an IPO soon.
Discord is privately held, and you cannot buy Discord stock on the open market. You may be able to invest in Discord shares in pre-IPO marketplaces. There may be high minimum purchase requirements and investor qualifications.
Pre-IPO stock purchases can be very profitable but carry a number of real risks.
FAQs
Discord is a communication platform offering real-time chat, voice communication, file sharing, and other services. It is the dominant communication platform in the gaming community and is rapidly moving onto other markets
Discord is designed to be used along with other apps, allowing users to communicate while they are engaged in a game, movie, project, or any other activity. It can be used across numerous platforms and uses many cutting-edge communication technologies.
Discord is still privately held so you can’t buy shares on a stock exchange. You may be able to buy Discord stock on a pre-IPO exchange. You may have to meet certain requirements in order to invest in Discord shares on these exchanges.
Discord operates in a highly competitive environment. The company is not currently profitable and relies on premium subscriptions for revenue.
